November 24, 2012

Irish investors claim EUR 27m from three Estonian businessmen

Gunnar Okk, Kristel Meos and Mart Habakuk are being accused of management mistakes and have been sued for EUR 27m by Irish-owned Metro Baltic Horizons (MBH), a property developer listed on the London stock exchange, writes Äripäev.

The lawsuit targets Metro Capital Management (MCM) and its three Estonian executives who are some of the most prominent businessmen in Estonia: Okk is vice president of the Nordic Investment Bank and former CEO of Eesti Energia, Meos has been top manager is Hansapank and investment company Trigon Capital while Madis and Mart Habakuk are founders and owners of the Estonian Business School.

The dispute concerns prime property developments acquired by MBH during the real estate boom in Tallinn and Riga. The company had bought expensive properties, developed them, but since the market had collapsed by then, was forced to sell them at huge losses or lost them to creditors. Last year MBH sold its Metro Plaza in central Tallinn at a loss of EUR 5.6m to a Lithuanian real estate firm, while two other projects in Riga were taken over by creditors.

MBH was actually founded by MCM and its three executives in 2006 and then listed on the London Stock Exchange. Irish investors acquired control of the company in 2010. At present Irish investors control more than 50% of MHB. In its press statement MBH said that and MCM its three Estonian executives had caused an estimated EUR 26.6m in damages to MBH through mismanagement, contractual breaches and conflict of interest in the years 2007-2009.

The Irish businessmen say that they found out only in 2010 when they took over the company that MCM had repeatedly had conflicts of interest and deliberately caused damages to Horizon. “Our lawsuit concerns all real estate investments of the company, but especially Metro Plaza and Krasta in Riga,” said Ronan Reid, CEO of MHB. All in all, the claim names 6 persons (Okk, Meos, Robin James,, including Paul McGuinness, former financial controller and James Kenny, former member of supervisory board of MCM) and 4 companies (MCM and its subsidiary Tolmain Advisory Services, McGuinness Investments and McCapital Ltd.)